If an Investor Buys Enough Stocks, He or She Can

question 57

True/False

If an investor buys enough stocks, he or she can, through diversification, eliminate all of the market risk inherent in owning stocks, but as a general rule it will not be possible to eliminate all diversifiable risk.

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Definitions:

Gini Coefficient

A measure of income inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality).

Lorenz Curve

A graphical representation used to show the distribution of income or wealth within a society, depicting the proportion of total income earned by various segments of the population.

Income Inequality

The unequal distribution of household or individual income across the various participants in an economy.

Household Income

The combined gross income of all members of a household, typically measured over a set period of time, such as a month or a year.